How Long Does the Insurance Company Have to Respond to a Demand Letter?

February 19, 2020

After you file a demand letter, it can seem like the hardest part of your settlement is over. Waiting for an insurance company to respond, however, can be difficult while you are also dealing with lost wages and medical bills. Luckily, state law enforces time limits by which insurance companies must respond to demand letters in Arizona. If the insurance company takes too long, you may be able to file a bad faith claim to move things along.

Average Response Time: 30 Days

Different states have different laws for insurance company response times. Some states do not have a requirement at all. In Arizona, Administrative Code R20-6-801 states that an insurance company must respond to demand letters within 10 working days of their receipt. The insurer has 10 days of receiving the claim to notify the claimant that it received the letter. The only exception is if the insurance company has already released payment before 10 days pass. The insurance company also has a legal obligation to promptly provide a claimant with all necessary forms and instructions.

If you send an insurance company any other forms of communication, the company must respond to you within 10 days. The insurance company can conduct an investigation after telling you it has received your claim, but the investigation cannot last longer than 30 days from receipt of the claim. If the insurer has a valid reason to extend the investigation phase, it must give this reason to you in writing. It must also let you know how much longer it expects the investigation to last.

Once your insurance company receives the evidence it needs from you, such as proof of loss, it must pay you within 30 days if you are the company’s policyholder (a first-party claim). Failing to pay you within 30 days of receiving your proof of loss could be insurance bad faith unless the company has a valid explanation. If you have been waiting longer than 10 days to receive notice that the company has received your claim, or longer than 30 days without getting an update about the investigation, contact an attorney. The insurance company could be guilty of bad faith.

Speed Up the Claims Process

You may be able to expedite the amount of time it takes an insurance company to respond to your demand letter. Follow all the rules and best practices for writing a demand letter, including hiring an attorney to get the language correct. Report your accident and injuries within the insurance company’s deadline (usually 24 to 72 hours). Follow up with your insurance company if you do not hear back promptly. If you still have trouble dealing with the insurance company, ask a personal injury attorney for assistance.

File a Bad Faith Claim for Delayed Payouts

Bad faith means the insurance company is breaching its legal obligation to handle your claim honestly and in good faith. It is, unfortunately, a common problem injured parties face when bringing claims with insurance companies. Insurance bad faith can refer to unfairly denying a valid claim, delaying payment without reason, requesting excessive documentation, misrepresenting facts or misinterpreting the terms of a policy. Failing to respond to your claim, reach a decision or pay the compensation owed by the state’s deadline are examples of bad faith.

If you believe you are a victim of insurance bad faith in Arizona, speak to a lawyer about protecting your rights. Having to wait longer than you reasonably should for financial recovery could add to your emotional stress during an already difficult time. Hiring a lawyer to negotiate a fair settlement with an insurance company on your behalf can give you peace of mind. A lawyer can also take immediate action if you suspect insurance bad faith. Filing a civil claim against the insurer for bad faith could lead to further compensation, such as fines and penalties against the insurance company.